BAKU, Azerbaijan, Feb.1
By Leman Zeynalova – Trend:
New US President Joe Biden’s oil policy will lead to less production in the country in the medium and long term, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit told Trend.
He noted that the Biden-initiated changes will also push for less US oil demand in the medium and long term.
As for the external impact, Welch noted that it is about more Iran production (short term impact).
The Biden Administration has proposed a ban on new permits for oil and gas drilling on Federal lands and waters.
“Most drilling is on private land, but if the ban is implemented, it could still eventually suppress the long-term potential output of US oil production. On 20 January—Biden's first day in office—he revoked the cross-border permit for the Keystone XL pipeline, and work on the project has since been suspended,” reads an analysis of IHS Markit.
“Relationships with key allies and geopolitical adversaries could also shift with a new US administration. Perhaps most importantly for the oil market, the Biden Administration is seeking to revive the Iranian nuclear agreement (the "Joint Comprehensive Plan of Action"). If Trump-era US sanctions on Iran are eventually lifted, the country's oil production and exports could rise very rapidly, challenging the efforts of OPEC+ to manage global supply. Evolving US relations with China, Russia, and Saudi Arabia could also buffer oil markets in unpredictable ways.
The Biden Administration is also supporting policies aimed at reducing GHG emissions from the transportation sector, which remains heavily reliant on petroleum, and is the primary source of oil demand in the United States. President Biden will likely move to accelerate increases in US fuel economy standards for passenger cars and light trucks and promote electric vehicles (EVs). Pro-EV policies pursued by Biden may include supporting the construction of more charging stations, a push to buy "clean" vehicles for public sector fleets, and more generous consumer EV purchase incentives,” said the company.
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